2011 (3) TMI 1478 - SC - Indian Laws

Securitisation and Reconstruction of financial assets and Enforcement of Security Interest Act, 2002 - Appellate Tribunal - Appeal to

Summary

Issues:
- Interpretation of section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 regarding pre-deposit for appealing to the Appellate Tribunal.

Analysis:
The judgment deals with an appeal against a High Court decision regarding the exemption of a borrower from making a pre-deposit under section 18 of the Act before appealing to the Appellate Tribunal. The Appellate Tribunal had allowed the appeal without requiring the pre-deposit, which was contested by the bank. The key issue was whether the Appellate Tribunal has the jurisdiction to exempt a person from making a pre-deposit as mandated by section 18 of the Act.

The Court examined section 18(1) of the Act, which provides the right to appeal to the Appellate Tribunal but also imposes the condition of pre-deposit. The second proviso states that no appeal shall be entertained unless the borrower has deposited fifty percent of the debt due from him. The Court emphasized that the requirement of pre-deposit is mandatory and a condition precedent for preferring an appeal under the Act. It held that the Appellate Tribunal erred in law by entertaining the appeal without directing the appellant to comply with the mandatory pre-deposit requirement.

Furthermore, the Court rejected the argument that the appeal could be entertained without pre-deposit if the amount of debt due had not been determined by the Debts Recovery Tribunal. It clarified that the borrower must deposit fifty percent of the debt due from him as claimed by the secured creditors if the debt is yet to be determined. The Court highlighted that the Appellate Tribunal, as a creature of the Act, cannot refuse to give full effect to the statutory provisions.

In the final decision, the Court directed the appellant to deposit a specific amount within a stipulated period for the appeal to be entertained and decided on merits. Failure to make the deposit would result in the dismissal of the appeal, allowing the bank to take further legal steps. The appeal was disposed of with no order as to costs, concluding the legal proceedings in the case.